Rea Gold evaluating Kookaburra assets

Rea Gold (TSE) is carrying out a due diligence review of the mineral assets of Kookaburra Gold (VSE) as a first step in plans to acquire a controlling interest in the Australian- backed junior. Although Kookaburra is best known for its Col copper property near Continental Gold’s Mt. Milligan gold-copper deposit in central British Columbia, the company also has a 100% interest in a Nevada property which contains an inferred mineral resource of about 100,000 million tons grading 0.35% copper and 0.015% molybdenum.

If these and other assets are found to be as represented, Rea Gold intends to acquire more than 80% of Kookaburra’s issued and outstanding shares under the terms of a recent agreement with the company’s Australian shareholders. It will pay a modest $1.3 million for the acquisition: $650,000 in cash and the equivalent of an equal amount in Rea Gold common shares at $1.25 per share.

Larry Reaugh, president of Rea Gold, said the Col copper property in British Columbia, and the SFS copper-molybdenum project in western Nevada are currently viewed as being the most prospective of Kookaburra’s assets.

“Both have the potential to contain deposits that would interest a major company,” he said.

Reaugh noted that the inferred resource on the SFS property is based on widely spaced holes that will require infill drilling to better establish the grade and tonnage. The property is also reported to contain anomalous gold, although the nature and extent of this are not yet understood. Kookaburra acquired the 111 claims after a major company allowed the claim block to lapse, allegedly because of an oversight in paperwork.

Kookaburra has an option to earn 100% of the Col property in British Columbia, which was explored in the 1970s during the porphyry copper boom. This property is reported to contain a widespread copper resource, and one satellitic zone containing nearly two million tons grading 0.6% copper. More recent work has shown the presence of gold on the property.

Kookaburra’s other assets include an option to earn 100% of the past-producing Hoodoo silver-lead- zinc mine in Custer Cty., Idaho (subject to a 60% earn-in by an outside optionee), and an option to earn 100% of the Hidden Valley epithermal gold prospect near Smithers, B.C.

Raising funds for the proposed acquisition shouldn’t be a problem for Rea Gold. The company has cash flow from its 30% interest and a 5% net smelter royalty at the Samatosum polymetallic mine near Barriere, B.C., which is operated by joint venture partner Minnova (TSE). The mine produces silver, copper, lead, zinc and gold.